Annotation of the results obtained in 2020
In 2020 the work on the project "Competitiveness of and leapfrogging by Russian business on the basis of intangibles" was focused on empirical testing of research questions which were put forward in 2018-2019, as well as the theoretical justification of new issues. All work performed and results obtained are grouped into six interrelated research areas: 1. In the first area of "Intangible-based company profile" a theoretical framework for studying the phenomenon of advanced development of companies based on intellectual resources, as well as the role of the region in the intensification of companies' knowledge resources were developed. Firstly, a systematization of scientific knowledge in the field of the industry leadership theory including bibliometric analysis of the relevant literature sources was performed. It was determined that a strategy of advanced development (leapfrogging) can be implemented through the opportunity windows, which include technological, demand and institutional windows. The development of the industry leadership theory through the synthesis of leapfrogging and intellectual capital concept, approved by case studies, is proposed. It was found that external factors contributing to leapfrogging, such as government support, are secondary and must necessarily be accompanied by the intensification of intellectual resources. Secondly, a theoretical framework has been developed to analyze the influence of knowledge sources on the innovative activity of companies, considering the heterogeneity of Russian regions. It was built at the intersection of the concept of knowledge management, innovation management and the concept of the regional innovation system. Its empirical testing was carried out on the survey data of more than 700 small and medium Russian industrial companies using hierarchical linear modelling (HLM). It was found that the region plays a significant role in the transformation of knowledge into company innovations. This allowed to substantiate the necessity to develop state support programs aimed at intensification of companies' knowledge resources. 2. Under the second area, "Switching to an Innovation Strategy", empirical testing of Russian companies' strategic behavior with respect to innovations during a stable economic situation and crisis years was continued. The external company’s factors that determine critical changes in innovation activity were identified. It was determined that switching to the innovation strategy during the crisis period allowed to obtain a significant positive economic effect. Only about 5% of the companies in the sample have switched to an innovative strategy. The minimal required level of investment shifts that ensure a positive economic effect was also identified. 3. Within the third line of "Voluntary and Involuntary Disclosure of Intellectual Resources", a methodology developed earlier to assess companies' intellectual resources disclosure was used to make a content analysis of American companies' annual reports. Empirical knowledge on the impact of intangibles disclosure on ROA and ROE indicators was gained. Data collection and preliminary analysis of intellectual resources disclosure in the news of 200 Russian public companies were conducted based on a similar list of terms. In addition, the sentiment analysis of the news about investments and development of Russian companies was carried out. It was revealed that sentiment has a positive effect on the shares prices of Russian companies, which confirms the hypothesis about the importance of the quality of information disclosure for investors. 4. In the field of " Development and Retention of Human Capital" developing a system of human and social capital metrics for a company top management as well as the empirical verification of their impact on the performance of Russian companies were carried out. Both traditional corporate governance indicators and recently developed metrics were used. In particular, Social Network Analysis was applied to build a network formed by professional connections among directors of the sample companies. Based on this analysis, indicators of the directors centrality in the network were calculated. The profile of the companies with the greatest centrality was identified: these companies are larger, have lower market value and closer relationships with the government. The impact of director centrality on company performance was studied by applying the two-stage least squares method in order to reduce the level of endogeneity. It was found that large companies, as well as the companies from energy industry, are able to increase their value through interrelated boards. 5. In the fifth area, "Global orientation and networking capabilities", the results of using the knowledge transferred through the networks of the board members as well as the knowledge gained through the companies' cooperative relationships were studied. Firstly, a detailed analysis of the literature devoted to the role of the foreign directors as members of the emerging market companies’ boards was conducted. Special intellectual capital characteristics of foreign directors that provide a positive effect of their membership on the board of directors were revealed. The assumption that companies included in the global value chains through both export-orientation and foreign capital share have a higher result from the presence of foreigners on the board has been substantiated and empirically tested. It was found that network connections of companies, which export goods and services, with foreign directors allow to increase their value. Foreign capital share testing does not provide statistically significant results. Secondly, based on existing literature several factors that hinder the development of knowledge in Russia were identified. It was justified that these factors may be resolved by strengthening cooperative communication between companies. Types of cooperation were identified and classified. Significance of cooperation for innovation activities was empirically studied on the survey data of 1328 companies within process manufacturing industries and high-tech services industries. We found a correlation between cooperation and innovation activities, as well as complementarity of different types of cooperation. Thus, there are two sustainable strategies of development for firms concerning R&D and innovations: company’s own efforts and cooperative activities. 6. In the area dedicated to identification of trends and best practices of government support for intensification of intellectual resources, we investigated the impact of economic policy uncertainty, economic freedom of regions, and the effect of state ownership on a firm’s intellectual resources and their transformation into company’s results. First of all, we analyzed the impact of the economic policy uncertainty on Russian companies’ investments. Using a sample of 1838 active Russian production companies over a period from 2009 to 2015, we confirmed that the increase in the level of economic policy uncertainty companies leads to a decrease in their investments. It is consistent with the results of previous research, conducted on the data from other countries. However, we found that Russian public companies are sensitive to the uncertainty of economic policy of European countries and the rest of the world and are not sensitive to economic policy uncertainty in Russia. Secondly, we justified the possibility of using a regional index of economic freedom developed by Coates, Mirkina and Murti (2017) for the analysis of institutions quality of Russian regions. Using hierarchical linear modeling we investigated the impact of economic freedom on the activity of 1096 public Russian companies, taking regional variation into account. We found that high level of economic freedom greatly improves profitability, companies’ investment attractiveness, and market expectations. The positive effect may vary depending on the region. Thirdly, we justified the role of state ownership as an important determinant of the effect of relationship with investors on the financial results of companies in developing markets. On a sample of 300 Russian companies listed on a stock exchange, we found that state ownership indirectly affects companies’ dividend policy, through the reduction of information asymmetry and financial constraints. It also changes the effects of the traditional dividend drivers. Based on these results we prove that dividends play an important role as a signaling mechanism in companies with state ownership. Furthermore, the research team supported the research project in the aforementioned areas. First of all, the team developed the analytical system “Monitor of Intangible Resources of a Company” (IAS MIRC). On the basis of consultations with business representatives, the efforts in 2020 were focused on development of a report on the digitalization of companies’ human capital. It allows to analyze change and extension of the required set of digital skills. Based on the publicly available sources the research team collected data on more than 9 million vacancies placed by Russian companies from 2004 to 2018. We classified the digital skills that could be identified based on the text description of vacancies. Methods of natural language processing were applied to transform and markup the descriptions. The prototype of the IAS MIRC report, based on the required digital skills of 745 large Russian companies, is available as an online dashboard: https://parshakov.shinyapps.io/MIRC/. Second, preliminary results were discussed during online workshops and international conferences sessions. News about workshops are available at the web page of the project (https://idlab.hse.ru/news_rnf1) and at the web portal IQ HSE that publishes press releases of papers written by HSE researches (https://iq.hse.ru/). Third, the results were introduced into the education process of bachelor’s, master’s, and postgraduate students of NRU HSE - Perm and NRU HSE – Saint-Petersburg. Forth, databases, created as a part of the project, were updated, adding new identifiers as well as additional periods. As a result of project No.18-18-00270 “Competitiveness and leapfrogging by Russian business on the basis of intangibles” 8 scientific articles with the foundation's affiliation were published or accepted for publication in international peer-reviewed journals, 7 of them - in journals indexed in Scopus and/or Web of Science databases, 4 of them - in journals indexed in RSCI.

 

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Annotation of the results obtained in 2018
In 2018 the team of the project “Competitiveness of and leapfrogging by Russian business on the basis of intangibles” (https://idlab.hse.ru/en/rnf_eng) has provided research and obtained results for six interrelated research topics: 1. Intangible-based company profiles. The theoretical analysis of the research field was carried out. It allows to reveal the topical question about the existence of indirect effect of intellectual resources on a company’s performance. As a result, it was hypothesized that company performance is formed as the interaction of different types of intellectual resources. The empirical estimation is provided using a sample of 126 representatives of small businesses in the Perm Region. The econometric analysis results suggest that the values and attitudes of managers and employees, as well as the quality of interaction with other companies, create a direct impact on the performance of small companies in the sample. The indirect effect in this regard is demonstrated by the other components of intellectual capital, namely: the quality of business processes, information system, corporate culture, knowledge and skills of employees, cooperation with suppliers. The ultimate structure of intellectual capital, which allows increasing the performance of small companies, is consistent with the previous studies and continues the research line on the intellectual capital, small companies, and emerging markets. 2. Switching to an innovative strategy. Behavioral theory of the firm is justified as a theoretical framework that allows to determine the necessary and sufficient conditions for switching companies to an innovative strategy. A quasi-experimental design was used to empirically identify the conditions for switching companies to an innovative strategy using a panel consisting of 1000 public Russian companies. It is revealed that, on average, Russian companies do not follow the principles of behavioral theory. In particular, they do not rely on their previous performance results when deciding to switch to a new innovation strategy. 3. Voluntary and involuntary disclosure of intellectual resources. The analysis of existing theoretical and empirical papers devoted to methods of measuring the level of disclosure was carried out, and the benefits and risks of disclosure were determined. Three main channels of disclosing information about intellectual resources and structured corporate information have been identified and described: annual reports of the company, the company's website, additional reports. An empirical analysis of the effects of R&D disclosure, which is the part of the intellectual resources of firms, was made using the sample of Russian and European pharmaceutical companies. The results show that the positive impact of R&D disclosure on the value is possible under conditions of a high level of intellectual property rights protection in the country. 4. Development and retention of human capital. The theory of upper echelons was implemented to justify the influence of personality, experience and values of the directors of the company on the results of its activities. The characteristics of directors, that are related to the results of the company according to the scientific literature, which can be determined on the basis of open sources, are revealed. The classification of these characteristics by inherent and acquired; external and internal is provided. 5. Global orientation and networking capabilities. Various strategies of companies behavior in global markets have been identified. Using the resource dependence theory (Pfeffer, Salancik, 1970), it is justified that the strategy of networking with foreign companies can be implemented by the inclusion of foreign members in the Board of Directors. These foreign directors act as a channel for the transfer of knowledge and provide global vision. Preliminary empirical testing using Russian companies data proves the success of such a strategy, since it increases the company's value. In addition, the risks of work on global markets that may reduce competitiveness are considered. As a topical example of this risk, the sanctions against Russia that were introduced in 2014 by foreign states are considered. It was revealed that economic sanctions were aimed at reducing the competitiveness of companies and imposing restrictions on the implementation of networking capabilities. An empirical analysis of share prices changes is conducted using the data of Russian public companies included in the MICEX index. The results confirm that the imposition and extension of sanctions led to the significant drop in share prices of Russian companies and identify the determinants of stock prices’ reaction. 6. Industry-level intellectual resources and company performance. It was found that current research about the relationship between intellectual resources and company performance are limited by the company level of analysis. The model, based on the resource-based view (Barney, 1991), the concept of intellectual capital (Stewart, 1998) and the theory of industrial organization (Porter, 1987), was developed. It allows to analyze the endowment of intellectual capital at two levels, firm and industry, and estimate the impact of each level on a company's labor productivity. In addition, the team of the project carried out activities that support the research topics mentioned above. In particular, a multilevel system of metrics for measuring intellectual resources was theoretically substantiated and empirically validated. Taking into account the growing popularity and accessibility of the Internet and digital technologies, the concept of relational capital has been rethought and the term “digital relational capital” has been introduced, eight metrics have been proposed and justified for its measurement. To validate the proposed digital equity capital metrics, the sample of large public Russian and European companies was collected. Using the regression analysis, the non-linear effect of digital relational capital on the financial performance of public Russian companies was revealed. Additional work was carried out to develop the analytical system “Monitor of intellectual resources of companies” (MIRC). The project team is developing a module that allows companies to independently enter information in order to compare themselves with industry leaders and self-diagnose the effectiveness of using intellectual resources. The current version of the system can be seen on the website: https://mirc-idlab.org/ According to the results of the project of project 18-18-00270 "Competitiveness of and leapfrogging by Russian business on the basis of intangibles" in 2018, the research team published 2 research papers: 1 paper in an international peer-reviewed journal indexed in the Scopus database, 1 paper - in a Russian journal recorded in the RISC database. Detailed results of the project can be found at: https://idlab.hse.ru/rnf_rus.

 

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Annotation of the results obtained in 2019
In 2019 work under the project No. 18-18-00270 “Competitiveness of and leapfrogging by Russian business on the basis of intangibles” was focused on empirical testing of theoretical models developed during the first year of the project. The results are obtained for six interrelated research topics: 1. Intangible-based company profiles. The empirical analysis of such intangible resources as the image of the company in digital space, external and internal sources of knowledge, digital innovations was continued. First, the aggregated indicators of website visibility and website authority are built with the use of cluster analysis. Empirical testing shows that website visibility positively affects the performance of Russian and European companies; website authority reduces the performance of Russian companies, while European companies benefit from increased website authority. An analysis of the strategic behavior of the world's largest companies included in the Forbes Global 2000 ranking in 2017 showed that the differences in strategies for managing digital relational capital are mainly explained by the size of the companies. Second, a new theoretical framework has been proposed for analyzing the impact of external (relationships between companies and with universities) and internal (R&D, as well as knowledge and qualification of employees) knowledge sources on innovations of small and medium-sized firms. Based on the survey data on small and medium-sized industrial Russian firms, it is revealed that external and internal sources of knowledge transform into company innovations. Third, quasi-experimental designs have been developed to determine the effect of digital innovations on the effectiveness of Russian companies. Using them, the conditions for digital innovation outcomes are determined: a shock in the demand for digital competencies in the labor market should occur at least 2 years before the technology implementation; the company must simultaneously introduce 2 or more digital technologies; a more pronounced effect is observed among B2C companies. It is revealed that one of the key factors of the innovations’ implementation is the shock of demand for digital competencies. 2. Switching to an innovative strategy. The return on innovation in Russian companies was studied and the conditions and consequences of switching to an innovative strategy were determined. First, theoretical analysis allows to justify the use of a nonlinear dynamic model based on the Cobb-Douglas production function to determine the average return on innovation. As a result of its empirical testing, it is identified that the level of return on innovation in Russia is 1.5%, which is lower than the same level that was previously estimated for other economies. Factors that explain the level of return on innovation are identified: the quality of the workforce, the coefficient of financial autonomy, as well as macroeconomic instability in the country. Second, the theoretical framework for studying changes in the strategic behavior of companies regarding innovation has been selected. Conditions for the company’s switching to an innovative strategy are empirically determined: a set of significant growth in intangible assets after at least a three-year R&D project and related investments, if such expenses were not observed in the previous period. It is empirically grounded that a proactive strategy during the recession in 2009 allows the company to receive significant economic effects from the switching. 3. Voluntary and involuntary disclosure of intellectual resources. A methodology for assessing the disclosure of intellectual resources based on the content analysis of companies’ annual reports has been developed. The methodology is tested using a sample of large Russian companies with the most liquid shares for the period from 2013 - 2017. A rating of Russian companies is built according to the level of intellectual resources disclosure in annual reports. Leading companies in the rating were identified. 4. Development and retention of human capital. Metrics of inherent characteristics of managers' human capital (age, gender) and acquired (experience, education), as well as social capital metrics are empirically validated. Selected metrics of human capital of top management are statistically significant form the choice of the company’s strategy. For companies that have chosen a strategy of leading and catching up evidence has been received of the stimulating effect of the compensation package on the relationship between the manager’s personality and the strategy chosen. 5. Global orientation and networking capabilities. A theoretical justification and empirical validation of network analysis tools ability to study the role of Board of Directors as a transfer channel and a source of new knowledge were carried out. The necessity of transforming current metrics that are widely used in network analysis is substantiated. A method is proposed for transforming classical network metrics, such as degree centrality and closeness centrality, in order to include additional characteristics of directors in the analysis. Using transformed metrics, it was empirically revealed that foreign directors influence corporate performance not only directly, but also indirectly through connected directors. 6. Industry-level intellectual resources and company performance. An empirical analysis of the industry effect on corporate results is provided; the reasons and consequences of receiving industry-specific state support were studied. First, a two-level model of the influence of intellectual capital endowment on the performance of Russian companies was empirically tested. It is revealed that the endowment of intellectual resources of the company and industry level affects the productivity of the company. Moreover, a greater effect is achieved from industry endowment than from endowment at the company level. Second, theories of industrial policy are highlighted, which explain the causes and consequences of state support. Empirical testing on the survey data of Russian manufacturing companies shows that in Russia decision-making on state support is consistent with the assumptions of the modern industrial policy focused on eliminating market failures. The determinants of state support are identified and classified by type of support (organizational / financial) and by decision-making level (federal / regional / municipal). In addition, the research team conducted organizational work to support the research process: First, work was carried out to develop the analytical system “Monitor of intellectual resources of companies” (MIRC). In particular, reports are developed to describe the company's image in the digital space as part of its relationship capital. The image of the company was determined using methods of natural language processing, sentiment analysis and web-scraping. Image indicators are calculated for 2 Russian companies, a rating of words that form the company's image is built, a form of interactive reports is developed. Second, the discussion of the work carried out within the framework of the project was held both within the HSE-Perm as part of a regular scientific seminar, in a form of an intensive series of scientific seminars at other HSE campuses and as part of presentations at international conferences. Third, the results obtained within the framework of the project are published in the form of press releases. Publications can be found on the RSF project page (https://idlab.hse.ru/news_rnf1) and on the IQ HSE portal, which publishes press releases of papers (https://iq.hse.ru/). Fourth, the results obtained within the framework of the project are included in the educational process of undergraduate and postgraduate students at the Higher School of Economics (Perm and Saint-Petersburg campuses). According to the results of the project of project 18-18-00270 "Competitiveness of and leapfrogging by Russian business on the basis of intangibles" in 2019, the research team published 2 research papers indexed in Scopus / Web of Science.

 

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